This post originally appeared on MainStreet.
Are you thinking that it’s time to talk with your aging parents about their financial situation? If you aren’t, you should be.
More and more Baby Boomers and older Gen Xers are hearing about friends who have suddenly discovered their parents no longer have the resources or wherewithal to meet their fiscal obligations. Or about someone’s parent dying or becoming incapacitated before sitting down to discuss money matters — forcing the adult children to shoulder a slew of emotional and financial burdens as they attempt to track down key financial documents and other personal data.
But experts say it doesn’t have to be this way, even though family discussions about money are never easy.
Increasingly, older Americans face financial strains as they confront growing health care expenses with diminishing resources. As a result their grown children are often required to step in, even as they’re providing financial assistance to their own offspring and preparing for their own retirement. “This is genuinely unprecedented in the U.S. and around the world,” says Paula Span, a contributor to the New York Times’ “The New Old Age” blog.
Even worse, many seniors have never discussed such matters with their kids — who have no real idea what resources exist, or where relevant paperwork can be found.
So, if you haven’t had “the talk” yet, do it. This will help you care for your parents in the way they desire, ease your own worries, and allow you to continue working toward your own financial goals. But it must be done with sensitivity, cautions Nicole Francis, a financial adviser at Hudson Advisory Group in New York. Controlling one’s money is a major aspect of adult independence and no one wants to willingly give it up.
Here are ten tips for doing it right:
1. Don’t wait for a crisis to begin
Don’t delay, especially if you already have questions about your parents’ finances or their ability to handle them. Span cites research indicating one early sign of dementia is financial — “falling prey to scams, making bad investments, not paying bills or paying them twice.” But even in the absence of such missteps, it’s important to open the conversation while you still can. “Have these discussions when they are still able to tell you what they have and what they want,” Span says.
2. Determine what you know, and need to know
Francis advises clients to prepare a list of resources and documents they’re aware of, and those they need to track down. This might include bank accounts, deeds and wills, along with medical, disability and long-term care policies. It should also specify where the relevant paperwork is stored, along with the location of any safe deposit box keys. For a list of materials your parents should ideally share with you, she recommends the aptly named Get Your Shit Together.
3. Don’t think you have to do it alone
Even if you’re initiating this on your own, it’s a good idea to talk with siblings and other close family members as you prepare. They may know things you don’t, and can certainly be supportive in other ways before the conversation takes place and while formulating and implementing long-term plans. Span says bringing in a trusted neutral third party, like a family law attorney, financial planner or geriatric care manager can help smooth the way.
4. Recognize the conversation will likely be awkward
Whether you’ve previously spoken with your parents about money or not, this particular talk will be sensitive. Accept this and prepare accordingly. Francis says you can take much of the pressure off by making sure your parents see themselves maintaining a sense of control. This means establishing yourself as a helper, not the authority. Drop the I-know-best attitude, don’t introduce ideas with “you should,” and never be condescending.